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Thu 5 Apr 2001 04:00 AM

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Region's ISPs face shakeout

Jordan-based new economy consultancy Arab Advisory Group is warning that ISPs in the Middle East face a round of consolidation and mergers as the market matures

ISPs in the Middle East should expect a wave of consolidation and mergers as markets converge, according to the Arab Advisors Group (AAG). The research company is predicting a shakeout amongst ISPs in the more mature liberalised markets such as the Lebanon will lead to the emergence of regional service providers in a new report on Arabian ISPs.

The report, which studies the future prospects of ISPs in the region, says that a shakeout of the fragmented ISP market is inevitable. “Five years after the emergence of the first liberalised ISP markets in the Arab world, the industry is undergoing rapid consolidation towards a more mature market with the emergence of regional players that can leverage the economies of scale, and provide a solid service,” said Mohammad Khatib, director AAG.

Regional penetration of Internet accounts was also affected by the large number of ISPs on offer. Although the UAE had the highest percentage of accounts with 8% of households having Internet access, Lebanon, with a fully competitive ISP environment, rated 5%. In Egypt and Jordan, highly fragmented markets had led to undercapitalisation of ISPs, which in turn had held back development due to lack of marketing and support. In Saudi Arabia, despite some competition in the market, the poor infrastructure had resulted only 0.75% Internet penetration. In the US, figures from Nielsen NetRatings show some cities such as Seattle, reaching almost 70% penetration.

AAG’s report, “ISPs in the Arab World: A market overview and analysis of recent mergers and acquisitions in the Arab World’s ISP landscape” is available to buy at

arabadvisors.com

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